Antero royalty payments have been half of what they normally are for the past 3 months. Probably due to a cut in production or reduced sales. Anyone have a clue?
Look at your gas prices on your December statements versus your more recent statements. In general, gas prices dropped quite a bit over the last three months. Also look at your production volumes.
This is the Henry Hub natural gas prices for the last few years and predictions for the next few months. Appalachia has its own contracts, but you can see the big drop in Jan-April to get a general feel.
Thank you Ms Barnes, very helpful!
@Carl_Eric_Wagner Also keep in mind that fracked wells are generally going to see most of their production (50-60%) of the WHOLE LIFE of the well in the first two years and they will drop off significantly afterwards. Its a depleting asset so every month a little less gas/oil is left in your well.
So your checks are lower because gas prices have dropped AND production has dropped. Even if gas prices rise, you wont see the same checks as before as production is now lower.
This graph makes it very clear. Hopefully the larger upward bound will come to fruition!
This particular graph from the EIA changes constantly, but a general guideline is useful for pondering the future.
Good info, Thank You
I am new to the mineral rights royalty. What caused the dip in price?
@coachsomme77 two things going on.
First, royalties are obviously dependent on the price of Oil & NatGas, and their prices have dropped significantly from last year and thus your royalties will dip (last year was really an exception as we cant expect $6-7 Natgas)
Second, all wells have a limited production lifespan because every paycheck you get is one month that oil & gas was sucked out from under your land and will never come back again. This production is not uniform and most of your well’s production (for fracked wells) will be in the first 2 years of its lifespan and EVERY year it will drop further.
So what all of us royalty owners are experiencing are (1) lower energy prices and (2) natural decline of a well.
Hope that helps
Supply & demand. Just like all commodities.
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